With bank financing tough to come by, developer Eric Bush last week launched a private equity fund to raise $85 million to help bankroll the $302 million mixed-use project he’s planning east of Cherry Creek Shopping Center.

Bush is projecting that investors in Steele Creek Equity Fund II will receive a minimum return of 23.01 percent as economic conditions continue to improve.

“We decided that we’ve got the tenants, and if the banks aren’t lending, we’ll just go ahead and raise the money,” Bush said.

Bush wants to build 528,000 square feet of hotel, retail, office and residential space at the southeast corner of East First Avenue and Steele Street. He says he has letters of interest from national retailers, including Dean and DeLuca, Hollywood Theaters, Mastro’s Steakhouse and Ocean Club, and Starwood Hospitality.

Bush has what is essentially the only site in the area that can accommodate a large hotel. A hotel is not an approved use under Cherry Creek North zoning, according to a 2008 resolution by the neighborhood association, which prohibits development of a hotel north of East First Avenue.

There were plans for a hotel at the Old Cook’s Mart building on East Third Avenue between Milwaukee and St. Paul streets, but the Cherry Creek North Neighborhood Association passed a resolution opposing it, essentially killing the deal.

The project called for an 80-foot-tall building, but the district allows only 55 feet of height at that location.